EUR/CHF Outlook: Bearish, as the exchange rate is below its 90-day average and near recent lows, influenced by increasing speculation around the ECB's easing measures.
Key drivers:
• Rate gap: The European Central Bank is not expected to raise interest rates in the near term, while the Swiss National Bank may consider cuts, widening the rate differential.
• Risk/commodities: Rising oil prices are positively impacting the Swiss economy, yet ongoing geopolitical tensions support the Swiss Franc as a safe haven, creating downward pressure on the Euro.
• One macro factor: Recent remarks from ECB officials suggest a focus on the euro’s strength, which could hinder policy adjustments aimed at boosting economic growth.
Range: EUR/CHF is likely to drift within its recent range, experiencing limited recovery potential due to current bearish pressures.
What could change it:
• Upside risk: A stabilization in geopolitics could boost the euro and counteract current bearish sentiment.
• Downside risk: Continuing deflationary concerns in Switzerland could lead to aggressive monetary policy measures by the SNB, further strengthening the CHF.
